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8/10/2019 Lancome Notesncomencomencomencome
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Solution
We suggest:
Lancme follow a differentiated market coverage
strategy by introducing Lancme Hyp.
Lancme change consumers perceptions and
preferences for higher quality consultation service and a
wider product line, while only changing consumers to
prefer higher innovative technologies.
The Problem Solving Format allowed us to analyze Lancme's current business
plan. We determined that Lancme should switch from an undifferentiated market
coverage strategy to a differentiated strategy. This differentiated approach will
potentially increase consumer preferences for wider product lines, higher
consultation quality and innovative technologies. Lancme will accomplish this by
focusing on advertising and promotional campaigns that address the product and
brand benefits described in the core benefit proposition. In addition, our
recommended MAGIC strategy will help Lancme defend itself strongly against
competitors.
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Market
Overall Market: Cosmetics and Skin care
Focus Market: Skin care
We began our Lancme analysis by defining the market which is cosmetics and
skin care. This market can be further divided into the following categories: body
care, makeup, hair care, and fragrances. Since Lancme focuses on keeping
women looking healthy and young, we chose skin care as the focus market, which
enables us to eliminate brands that are not substitutes for skin care, such as L'Oreal
and Almay. Within this skin care focus market, Lancme's main competitors are
Clinique, Perscriptives, Mac, Estee Lauder, Olay, Neutrogena, Clearasil and Clean
and Clear. These competitors act as substitutes to our Lancme brand.
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Segmentation Variables
Benefits SoughtSpecial / Regular
Marketing Mix Sensitivity
Price Sensitivity
Demographics
Age
In order to determine our market coverage strategy, we must first consider variables
that can segment our focus market. Any company could potentially use these
segmentation variables to segment the skin care market. We believe the relevant
segmentation variables are: benefits sought, demographics, and marketing mix
sensitivity.
We believe that women seek the benefits of both intensive skin treatments and less
intensive, basic skin care products. Older and younger women are becoming
increasingly interested in anti-aging products, while many still prefer basic skin care.
The skin care market can also be segmented based on marketing mix sensitivity.
With price sensitivity, consumers reactions to various levels of price are taken into
consideration. Demographics, in terms of age, is another way to segment the skincare market by considering both older and younger women.
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Segmentation Circle
High Price
Medium
Low Price
OlderW
omen
Youn
gerW
omen
Specia
l
Regu
lar
After dividing the focus market into segments, we developed a segmentation circle
that visually depicts how this market can be segmented for all competitors. These
segmentation variables not only help determine how to segment the market, but
also help formulate a company's market coverage strategy.
There are three possible market coverage strategies: undifferentiated, differentiated
and concentrated. With an undifferentiated market coverage strategy, a company
offers a single brand to satisfy all market segments. A differentiated market
coverage strategy offers multiple brands to satisfy all consumers in the market. A
concentrated market coverage strategy uses one brand to satisfy one particular
market segment.
After analyzing our segmentation circle, we can determine which market coverage
strategy is most applicable for Lancme to implement.
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Actual and Recommended Market
Coverage Strategy
Lancme is currently using an Undifferentiated Market
Coverage Strategy
All Lancme products are sold under one brand name for all
segments.
We recommend Lancme use a Differentiated Market
Coverage Strategy
Extend the Lancme product line by developing Lancome Hyp
Lancme currently uses an undifferentiated market coverage strategy as they
ignore segmentation variables and sell to the whole market with one brand. Based
on our segmentation circle, Lancme should use a differentiated market coverage
strategy. We recommend switching from an an undifferentiated to a differentiated
one to effectively widen our product line and improve service quality. We feel a
differentiated strategy may benefit Lancme as they can extend this line by diving
into a new younger market which we like to refer to as Lancme Hyp. A
differentiated strategy will also allow Lancme to operate in both the older and
younger skin care markets with a new Lancme product extension. This new
strategy will pull in new customers and increase profits.
The market coverage strategy defines the target market by describing to whichconsumers the Lancme brand caters. With a differentiated strategy, Lancme will
address the needs and wants of its entire market with the use of two product lines.
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Target Market
With a new Differentiated Market Coverage Strategy,Lancme focuses on both older and younger womenwithin the skin care market.
Lancme:
Appeals to women that seek more intensive skin products(anti-aging, wrinkle release)
Lancome Product Extension: Lancme Hyp:
Appeals to women, mostly younger, who seek less
intensive proactive skin care products.
With this new differentiated market coverage strategy, Lancme establishes its
target market. Rather than focusing simply on older women skin care needs, this
new strategy enables Lancme to target a younger skin care market as well. The
original Lancme product line appeals to women that seek more intensive skin care
products such as anti-aging and wrinkle release formulas. Lancmes product line
extension, Lancme Hyp, will appeal to women seeking less intensive, proactive skin
care products. We believe this wider market will give Lancme the opportunity for
growth as they will satisfy more consumers skin care needs and wants.
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Price Hypoallergenic
Quality of Ingredients
Dermatologist Recommended
Variety of Product Lines
Stock Availability
Promotions
Consultation Quality
Innovative Technology Packaging
Needs and Wants of the
Target Market
The needs and wants of consumers in the skin care market can be used to
understand consumers purchasing decisions. Our skin care target market is a
segment of the whole cosmetics and skin care market. Thus the needs and wants
of our target market are more specific than the needs and wants of the whole
market. Lancme must focus on the target markets needs and wants in order to
establish which are most important to consumers. This will allow Lancme to
position its brands more effectively.
Price is important to consumers as many make purchasing decisions
based on price.
Consumers with more sensitive skin types value the safe ingredients
of hypoallergenic formulas.
Consumers value quality of ingredients as skin care products are
used on sensitive areas.
People value dermatologist recommended products as it provides
consumers with confidence and trust in brands.
Consumers like choice when picking out skin care products including
intensity levels, colors, etc.
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Price Hypoallergenic
Quality of Ingredients
Dermatologist Recommended
Variety of Product Lines
Stock Availability
Promotions
Consultation Quality
Innovative Technology Packaging
Needs and Wants of the
Target Market
Needs and Wants Continued
Consumers want the convenience of onsite stock availability as it
provides consumers with quick and easy purchases.
Promotions appeal to consumers because people like free samplesand also like getting more for their money.
Consumers value professional consultation assistance whenpurchasing skin care products as it ensures product satisfaction.
Innovative technologies are important to consumers because people
value new trends.
Consumers value product packaging as they like having choices interms of size and product package groupings.
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Buyer Behavior Flow ChartNeed for Skin Care
Skin Care Intensity High Low
Price High Medium Low High Medium Low
Stock Availability Low High Low High
Quality of Ingredients High Low High Low
Variety of Product Line Wide Narrow Wide Narrow
Innovative Technology High Medium Low High Medium Low
Consultation Quality Great Poor Great Poor
In order to understand how consumers in the target market make purchase
decisions for skin care, we carefully examined our target markets needs and wants.
This chart demonstrates the different possible routes a consumer can take when
choosing a line of skin care. The evaluative dimensions at the top of the buyer
behavior flow chart are the decisions most important to consumers. The bottom
three dimensions most important to Lancme positioning, which can ultimately
make a difference in brand choice.
Our flow chart begins with a need for skin care. Once this need is established,
consumers decide on the intensity of skin care needed. Price, ranging from high to
low, is the second most important evaluative dimension to consumers followed by
low or high stock availability. Quality of ingredients follows stock availability and isviewed as high and low quality. Consumers next buyer behavior step focuses on
variety of product lines as some people like having many options whereas others
are not as picky. Depending on how selective consumers are in choosing skin care
products, customers may or may not prefer innovative technologies. The final
decision made by consumers is whether they prefer great or poor consultation
quality.
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Evaluative Dimensions
Skin Care Intensity Price
Stock Availability
Quality of Ingredients
Variety of Product Line
Innovative Technology
Consultation Quality
From the buyer behavior flow chart, we were able to distinguish seven evaluative
dimensions consumers use to choose skin care products. Skin care intensity, price,
stock availability, quality of ingredients, variety of product line, innovative
technology, and consultation quality are the factors consumers take into
consideration when choosing a particular brand in the skin care market. We will
focus on the last three dimensions (variety of product line, innovative technology,
and consultation quality), which will ultimately form Lancme's position against its
competitors.
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Positioning Map
Variety of Product Line vs. Innovative Technology
Innovative Technology vs. Consultation Quality
Variety of Product Line vs. Consultation Quality
We decided to analyze three different positioning maps covering our last three
evaluative dimensions: variety of product line, innovative technology, and
consultation quality. These positioning maps will allow us to determine Lancme's
current market position, where we feel Lancme should be positioned in the future,
and determine how we are going to get Lancme to this new position. We mapped
variety of product line vs. innovative technology, innovative technology vs.
consultation quality, and variety of product line vs. consultation quality.
The purpose of the positioning maps is to develop a better understanding of where
consumers perceive Lancme within the market, compared to its competitors. Each
map is formulated with company logos, green circles, and green and/or yellow
arrows. The logos represent current consumers perception of companypositionings within the market, based on the compared evaluative dimensions. The
green circles represent consumer preferences of skin care products within the focus
market; the darker green gradients represent more heavily populated preferences.
The green arrows signify our desired directional shift in consumer preferences. The
yellow arrows signify the desired shift in consumer perceptions of Lancme's
position within the market.
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Positioning Map OneVariety of Product Line vs. Innovative Technology
Innovative Technology
Variety of
Product Line
High
Low
NarrowWide
For the first positioning map, we chose to compare the evaluative dimensions of
variety of product line and innovative technology. Lancme's main competitors are
Clinique, Prescriptives, Estee Lauder, MAC, Olay, Neutrogena, Clean and Clear,
and Clearasil. Using these two dimensions, we found that there was a general
preference for cheaper drug store brands and a general preference for pricier
department store sold brands.
We feel that more consumers prefer the brands found in the lower right hand
quadrant; therefore, we believe it is important to change consumers preferences to
above Lancmes current position, represented by the green arrow. Although
Lancme is perceived as having a wide variety product line and high innovative
technology, they are currently perceived as similar to Clinique and Prescriptives.We feel the best position to differentiate Lancme from this competition within this
quadrant is to move farther out on the evaluative dimension of product line variety,
represented by the yellow arrow.
These actions will help Lancme gain more customers by convincing consumers
that variety of product line is important and Lancme can supply them with the
products they need.
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Positioning Map One Logic
Preferences Skin care consumers currently prefer more narrow variety of
products with lower innovative technologies.
We want consumers to prefer just the opposite a wider variety ofproducts with higher innovative technologies.
Perceptions
Skin care consumers currently perceive Lancme as having a widevariety of products, but we want consumers to view our company ashaving an even wider product line.
Lancme does not need to change consumers perception on itsinnovative technologies as consumers already perceive Lancmeas having high innovative technologies.
The first positioning map provides us with an understanding of where preferences
lie in the skin care market, based on the comparison of variety of product line and
innovative technology. According to the map there are two distinct preference
circles.
Although Lancme currently sits in a successful position, we feel they can create a
stronger position by altering consumer preferences and perceptions. Through
variety of product line and innovative technologies, we hope consumers will prefer
higher quality skin care products and thus move to the upper left hand quadrant in
the positioning map. Changing consumer perceptions by extending the evaluative
dimension of product line variety, we hope consumers will perceive Lancme as the
better skin care brand.
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Conjoint Analysis OnePerception of
Wide VarietyProduct Line
10 15 30
Quantity of
Products in
Line
We performed a conjoint analysis to illustrate our plan to increase consumers
perceptions that Lancme has a wide variety of products. This positive relationship
represents that the more products a company offers, the more consumers will view
the company as having a wider variety product line within the skin care market.
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Positioning Map TwoInnovative Technology vs. Consultation Quality
Consultation Quality
Innovative
Technology
Great
Poor
LowHigh
Innovative
Technology
Great
Poor
The second positioning map compares the evaluative dimensions of innovative
technology and consultation quality. With these two dimensions, we found that
there is a general preference for cheaper drug store brands, and a general
preference for pricier department store sold brands.
We feel that more consumers prefer the brands found in the lower right hand
quadrant; therefore, we believe it is important to change consumers preferences to
above Lancme's current position, represented by the green arrow. Although
Lancme is perceived as having great consultation quality and high innovative
technology, they are however in a position similar to Clinique and Prescriptives. For
Lancme to differentiate itself from this competition, we feel they should change
consumer perceptions so that Lancme is seen as having an even greaterconsultation quality, represented by the yellow arrow.
These changes will help Lancme gain more customers by convincing them that
there will be higher skin care product satisfaction in experiencing greater
consultation quality.
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Positioning Map Two Logic
Preferences Skin care consumers currently prefer lower consultation quality
and lower innovative technologies.
We want consumers to prefer higher quality consultation qualityand higher innovative technologies.
Perceptions Skin care consumers currently perceive Lancme as having above
average consultation quality, but we want consumers to viewLancme as having outstanding quality.
Lancme does not need to change consumer perceptions forinnovative technology because consumers already perceiveLancme's technologies as highly innovative.
The second positioning map provides us with a better understanding of where
preferences lie in the skin care market, in terms of innovative technology and
consultation quality. According to the positioning map there are two distinct
preference circles.
Even though Lancme currently is successfully positioned within the skin care
market, we feel they can create an even stronger position by changing consumer
preferences and perceptions. Through innovative technologies and consultation
quality, we would like consumers to prefer brands that have high levels of innovative
technology and great consultation quality by moving to the upper left hand quadrant
in the positioning map. Changing consumer perceptions by extending the
evaluative dimension of consultation quality, we hope consumers will perceiveLancme as the better skin care brand.
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Conjoint Analysis Two
Perception of
Great
Consultation
Quality
15 30 45+
Time in
Minutes
We performed a second conjoint analysis to illustrate our plan to increase
consumers perceptions that Lancme has great consultation quality. This graph
shows that the more time spent with a professional consultant, the more consumers
perceive Lancme as having great consultation quality. Even though there is a
positive relationship, consumers perception of consultation quality will begin to
plateau as time spent continues to increase.
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Positioning Map Three Logic
Preferences
Skin care consumers currently prefer a more narrow variety of
products and lower consultation quality.
We want consumers to prefer a much wider variety of products and
greater consultation quality.
Perceptions
Skin care consumers currently perceive Lancme as having a wide
variety of products, but we want consumers to perceive our
company as offering an even wider variety of products.
Skin care consumers currently perceive Lancme as having above
average consultation quality, but we want consumers to viewLancme as having outstanding quality.
The third positioning map provides us with a greater understanding of where
preferences lie in the skin care market, considering variety of product line and
consultation quality. This positioning map shows two distinct preference circles.
Lancme is presently in a successful position within the skin care market; however,
we feel they can establish an even stronger position by changing consumer
preferences and perceptions. Through variety of product line and consultation
quality, we hope consumers will prefer higher quality skin care products with respect
to both these evaluative dimensions and thus move to the upper left hand quadrant
in the positioning map. Changing consumer perceptions by extending the
evaluative dimensions of both product line variety and consultation quality, we hope
consumers will perceive Lancme as a better skin care brand. This change inperception will help to differentiate Lancme from Clinique and Prescriptives.
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Conjoint Analysis Three
Perception of
Wide Variety
Product Line
Current
Marketing of
Wide
Product Line
Increased
Advertising
of Wide
Product Line
Increased
Advertising and
Promotion of Wide
Product Line
We performed two conjoint analyses for this particular positioning map in order to
graphically illustrate that both a wide variety of product line and great consultation
quality have the greatest effect on consumer perceptions. This particular analysis
shows that by increasing advertising and promotion while focusing solely on the
benefit of Lancme's wide variety product line, consumers will then perceive that
Lancme does in fact offer a wide variety of product line within the skin care market.
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Preference Analysis
Preference of Individual for Lancme = (Importance of attribute)*(Individual Perception of Lancme & Lancme Hip)
Current Preference
= (Weight of Consultation Quality) 4 * 7 (Perception of Consultation Quality)
+ (Weight of Variety Product Line) 4 * 7 (Perception of Variety Product Line)
+ (Weight of Innovative Tech) 3 * 7 (Perception of Innovative Tech)
= 77
Future Preference
= (Weight of Consultation Quality) 6 * 9 (Perception of Consultation Quality)
+ (Weight of Variety Product Line) 7 * 9 (Perception of Variety Product Line)+ (Weight of Innovative Tech) 4 * 7 (Perception of Innovative Tech)
= 153
Based on our positioning maps, we recommend that Lancme increase consumers
future perceptions of its consultation quality and variety of product line. In order to
represent such a rise in preferences for Lancme products, we increased the
weights on both of these evaluative dimensions. In changing these weights, we
performed two conjoint analyses that could change consumers perceptions from
medium-high (7) to high (9), through an increase in advertising and promoting
Lancme's wide variety product line and greater consultation quality service time.
We do not plan to change the perception of Lancme's innovative technology
(remain at 7) since consumers already perceive Lancme as having innovative
technologies; yet we plan to slightly increase the weight from 3 to 4 as we feel it will
enhance future preferences for Lancme as a whole.
We recommend that Lancme take actions to enhance consumers importance level
of wide variety product line and great consultation quality that will result in
increasing consumers preferences for Lancme by approximately 75%.
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Core Benefit Proposition
Lancme carries a wide variety of products
through innovative technologies that are
sold with the personal assistance of a
professional consultant.
After analyzing our three positioning maps, we are able to create Lancme's core
benefit proposition. This statement includes Lancme's position on all three
evaluative dimensions: wide variety of products, innovative technologies, and
consultation quality. Our core benefit proposition summarizes Lancomes consumer
focus in terms of skin care needs: Lancme carries a wide variety of products
through innovative technologies that are sold with the personal assistance of a
professional consultant.
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3 Ps Price
Skimming: Charge more for better products and higher quality services.
Placement Selective Distribution Strategy: Lancme owned boutiques and
large department stores worldwide, but not drugstores or grocery stores.
Promotion Pull Strategy:
Magazine ads and television commercials
Promotions and direct mail
Push Strategy: Lancme consultants personally selling
Department in-store displays
Lancme's product strategy is simply based on its core benefit proposition. From
this, we derived the marketing mix variables of price, placement and promotion,
which will benefit Lancme's strategic positioning. We suggest Lancme use price
skimming as Lancme offers a wide variety of products that cater to women of all
skin types and provide professional consultants through higher quality services.
This allows Lancme to price its product slightly above its competitors as
consumers will receive better products and services.
We also recommend Lancme use a selective distribution strategy to successfully
place its products. Through selling in Lancme-owned boutiques and distributing in
large department stores, Lancme can utilize their consultants to sell and provide
high service to customers. Selling in grocery and drug stores would only hurtLancme's image as these store types would not allow Lancme to sell products
through consultants.
Lancme should use a pull/push promotion strategy to increase demand that
incorporates Lancme's core benefit proposition. Magazine ads, TV commercials,
promotions, and direct mail are a means to gain consumer awareness. Through
personal consultations, Lancme consultants can utilize its benefit of high quality
services and increase consumers knowledge of the Lancome brand. In-store
displays throughout department stores help promote wide variety product line, great
consultation quality, and innovative technologies.
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Message of Pull Promotion
To introduce a more youthful product line to new andreturning Lancme consumers.
To inform consumers that Lancme provides avariety of innovative skincare products, which aresold by professional consultants specially trained tomeet all types of skin needs.
Lancme's message for pull promotion should convey the core benefit proposition
to consumers. The message should also communicate to the consumer that
Lancme provides a wide variety of skin care products through both Lancme and
Lancme Hyp. Lancmes products are all formulated with the latest innovative
technologies and are sold by professional consultants trained to provide consumers
with high quality service. Lancme should use different promotions, direct mail
campaigns, beauty magazines, along with other media advertising to convey this
message and to stress the importance of Lancmes benefits in meeting all skin
care needs.
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Business Model
Lancme will always produce new, trendyinnovative skincare products at highmargins.
By staying on top of skin care trends, Lancmewill be able to: demand
sales
profits
Lancmes business model is based on the price and placement marketing
variables combined with profit margins. Lancmes skimming price strategy and
selective distribution strategy allows them to always produce new, trendy innovative
skin care products at high margins. This business model will potentially increase
Lancmes profits by meeting consumers unmet needs and wants, thus increasing
high-margin sales.
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Recommended MAGIC Strategy
Actions that Probably will not be Matched Lancme Boutiques
Personal Consultation Opportunities
Actions that Cannot be Matched Lancme continually advertises upcoming product lines
and its enhanced technologies.
Trademark Lancme Hyp
In order for Lancme to protect their marketing plan from competitors, they should
utilize a marketing strategy that probably will not be matched and one that cannot
be matched. The opening of Lancme-owned boutiques can be considered an
action that probably will not be matched under the subcategory that of developing a
promotion for its products that is inconsistent with competitors promotion tactics.
Currently no competing skin care brands sell products and high quality services in
this independent and focused fashion. Lancme offers consumers one-on-one
consultation opportunities that consist of skin type and coloring tests, a final full-face
makeover, and a gift bag of free samples. These consultation opportunities
differentiate Lancme from other skin care consultants as Lancomes professionals
must be beauty school trained.
Lancmes Web site to offer specific pages solely to inform consumers aboutupcoming product lines, seasonal trends and enhanced technologies. No other skin
care brand currently utilizes the Internet to inform consumers of such future
products; therefore making this an action that cannot be matched. Finally, another
action that cannot be matched is to trademark the brand name Lancme Hyp, with
all of its connotations.
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Recommended MAGIC Strategy
Actions that Probably will not be Matched
Lancme should push consumer opportunity for more
one-on-one skincare assistance at their Boutique
locations.
Advertising will help create a consumer desire for more
personal skincare consultations.
After analyzing Lancmes current MAGIC strategies, we recommend they also
implement an action that probably will not be matched by competitors. Lancme-
owned boutiques pamper customers in a quieter, more personal atmosphere. This
new MAGIC strategy with additional advertising, differentiates Lancme from other
skin care brands by making people believe that the more personal time and help
with a professional consultant, the more satisfied they will be with the overall
Lancme experience.
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ConclusionLancme Should:
Change to a differentiated market coverage strategy.
Create a product extension: Lancme Hyp
Increase consumer preference and perception that Lancme has awide variety of products and great quality consultations.
Increase consumer preference for higher innovative technologies.
Promote the value in one-on-one professional assistance at
Lancome boutiques.
After utilizing the Problem Solving Format, we conclude that Lancme should switch
from an undifferentiated market coverage strategy to a differentiated strategy
through selective distribution. This new strategy includes Lancme extending its
current product line to a younger market through Lancme Hyp. Lancme should
attempt to increase consumer preferences and perceptions that Lancme offers a
wide variety of product line and great consultation quality. Lancme is already
perceived as having high innovative technologies; therefore Lancme should focus
on increasing consumer preferences for higher innovative technologies. These
changes to Lancmes strategy are brought together as they will increase
advertising and promotions on the value of personal, professional services at their
new boutiques and on all aspects of their core benefit proposition.
Recommended